State oversight panel considers releasing Pittsburgh from Act 47

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Pittsburgh has made great strides since being on the brink of bankruptcy nine years ago and deserves to reclaim some of its financial independence, city officials and members of a state oversight panel said on Thursday during a public hearing.

But two speakers — City Councilman Bill Peduto and Controller Michael Lamb, both likely candidates for mayor next year — cautioned that Pittsburgh still bears the weight of more than $600 million in debt, a shrinking revenue base and $1.5 billion in legacy costs that include pension obligations, workers' compensation payments and soaring health care bills for retired city employees.

Peduto was the only person to argue against release from Act 47 oversight — the city would remain under the watch of the Intergovernmental Cooperation Authority. He said Pittsburgh has not met all of the terms of the Act 47 team's financial recovery plan.

“We're on a track to recovery,” Peduto said. “We're just not quite there yet.”

The state declared Pittsburgh to be financially distressed in 2003 after then-Mayor Tom Murphy sought a bailout from chronic budget deficits, debt approaching $1 billion and a junk bond credit rating.

The state appointed two oversight committees — the Act 47 team and the ICA — to help guide the city out of its financial morass. Since then, the city has been required to submit budgets and five-year financial plans to the oversight agencies for approval and to abide by the Act 47 team's recovery plan.

James Roberts, an Act 47 coordinator, said the city has met key components of the recovery plan by retiring $279 million in debt and replacing annual deficits with surpluses. He noted that bond rating agencies have upgraded the city's credit score, and that the city avoided state takeover of its pension system in 2010 by committing $736 million in parking taxes over 30 years to the pension funds.

“We're basically saying we think we worked ourselves out of a job,” Roberts said.

Roberts, a Downtown attorney, said the city needs continued ICA oversight to cope with the legacy costs and debt.

“This is not a mission accomplished,” said Gordon Mann, a member of the Act 47 team. “The pension problem isn't solved. The debt problem is not solved. But there are strategies in place, and there's been significant progress made.”

“I think based on the facts and based on our budget, we all believe it's time for the city of Pittsburgh to be removed from Act 47,” the mayor said.

Lamb said he supports the city's release, but he warned that it must pump more money into pensions, continue paying down debt and find additional revenue sources.

“The cautionary tone you are hearing arises from the real concern people have about this administration operating without that additional layer of oversight,” Lamb said.

Twenty-nine people, mostly public officials and including local business and civic leaders, spoke at the hearing.

Fred Reddig, executive director of the governor's Center for Local Government Services, who acted as the hearing officer, said state Department of Community and Economic Development Secretary C. Alan Walker would weigh the testimony and a report from the Act 47 team before he makes a decision. That will come in “a timely manner,” Reddig said.

Pittsburgh is one of 21 municipalities under the oversight of an Act 47 team. It would be the seventh to be released from Act 47 oversight.

Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder@tribweb.com.

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